Bears On The Prowl

The bulls had no chance yesterday. It was straight down from the opening bell with the bears feasting on a long overdue correction.

As a reader of this blog, this should come as no surprise to you as I have been harping for months on the fact that the signs of an economic recovery are more wishful thinking than reality.

Stocks got slammed as fear spread worldwide that any recovery might be weak at best as many had a chance to digest Friday’s consumer confidence data over the weekend. The U.S. followed the rest of the world down after nasty sell offs in China, Japan, India and Europe set the tone for this Monday. So much for the idea that worldwide diversification has any merits.

The big question now is whether this will be a one-day event or the beginning of more slippage. I don’t even want to guess, since it is out of my control anyway. What is in my control is how I react should the markets head further south; my sell stop points are clearly defined, and I will execute them in the event we reach their levels.

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Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more.

While the market lost all of August's gains on Monday, August 17, many analysts began to say that investors and traders were beginning to think that consumers could not or would not spend the economy out of the recession. Even though the market has rebounded a lot, since Monday, August 17, I'm kind of in the camp of those analysts who think like I stated above. Whether or not the stimulii were the way to go or not, eventually they aren't going to be there any longer and the economy will have to function on its own. Monday might have been a harbinger of that kind of thinking by investors and traders. But, as you say, this market seems to have a mind of its own. As far as I could tell, there was only the very slightest technical indication that there was going to be a sell-off on Monday. So, who knows? This is all the more reason for your stop-losses, Ulli.

Anonymous- Are you studying the future of the markets? Now that's something I'd like to see. If you want to study something study the '73-'74 bear market and the ensuing bull.

I just completed a trip from NY to Maine, and I can tell you that the roads are full of new Hondas, Fords and Toyotas, the hotel prices are up, the hotels are full, the bars and restaurants are full. I have yet to see any "major" indication that the U.S. consumer has scaled back very much.

Your are correct Chuck as I went up to Michigan from Florida and just returned. All the restaurants, gas stations etc. was full and the traffic was terrible everywhere with lots of new cars, big pick-up trucks an SUVs everywhere.

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